Trade

The Galwan Clash and the Case Against Chinese Telecom Companies

Since there is no solution through the use of arms and diplomacy may or may not work, India is left with only one option: trade.

First the facts – China’s GDP is about five times that of India’s according to the World Bank – US $ 13.2 trillion to $ 2.7 trillion.

Its defence budget is about four times larger than India’s – $ 261 billion compared to India’s $ 71 billion, according to SIPRI.

From a purely economic and military perspective, China outpunches India by a distance. We are the weaker nation in both dimensions. So how can India handle China’s recent belligerence in Ladakh that resulted in the death of 20 Indian soldiers and injuries to dozens of others?

The first approach should be through diplomacy, because China cannot be dislodged from positions that they have now occupied in the Galwan Valley or Pangong Tso using military means.

The infrastructure on the Chinese side is better than that on the Indian side. China can introduce troops and heavy weapons faster than India. One of the reasons for China’s belligerence is the all-weather road that India is laying from Dabruk through Shyok to Daulat Beg Oldie (DSDBO). China sees this as a threat to the China Pakistan Economic Corridor (CPEC). China is also angry that India has steadfastly opposed the Belt and Road Initiative (BRI) from the beginning; for good reason, since one of the roads passes through Pakistan occupied Kashmir.

Also read: Ladakh Clash Was Long in the Making But India, China Now Need an Honourable Exit

In spite of China’s aggressive policies, India has tried to maintain an equilibrium in its relations with China. The Prime Minister has reached out to China multiple times, most recently at Mamallapuram. However, it is clear that China is not interested in diplomacy.

Rightly or wrongly, it is seen by large sections of the world as the villain in the COVID-19 crisis, and is trying to steer the discussion to other topics.  The new security law in Hong Kong, its standoff with Malaysia, its aggressive occupation of islands in the South China Sea and the incidents along the LAC are only the latest in a series of strategic steps it has taken.

There is a school of thought that Xi is under pressure in China. If true, this might be his way of showing his rivals that he is a strong leader. External affairs minister S. Jaishankar was India’s Ambassador to China for more than four years and may succeed in his efforts to return the situation to status quo as it existed in April. However, this is a tall order and something that might take time to succeed, if at all.

Since there is no solution through the use of arms and diplomacy may or may not work, India is left with only one option: trade.

Several analysts have dismissed the idea of using trade restrictions to get back at China – ostensibly because it might affect India more than China. However, there is merit in considering a nuanced approach to this topic. While there is no value in banning Chinese toys and umbrellas, most of which are of poor quality anyway, the high technology industry is another matter altogether.

Consider the next generation mobile network – 5G. Gartner forecasts  that 5G infrastructure revenue, which was $ 2.2 billion in 2019 will grow to $ 6.8 billion in 2021. Several companies market 5G equipment including Huawei, Ericsson, Nokia, Cisco, Samsung & ZTE. Huawei & ZTE from China, Sweden’s Ericsson and Finland’s Nokia have two-thirds of the market for 5G equipment. Huawei has the largest market share at 29%.

Huawei’s rise to prominence has been marred by controversies. In its early days, Huawei was accused by Cisco of copying its source code in its products. While the case was settled out of court, Huawei admitted to Cisco’s accusations of copying code.

Also read: India to Give 5G Spectrum for Trials to All Operators, Including China’s Huawei

Several high technology companies have filed cases against Huawei including, curiously enough, another Chinese company ZTE. While such lawsuits are common in the high technology industry – Apple vs Qualcomm and Apple vs Samsung are examples – the cases pertaining to 5G merit attention.

Several nations have declared that Huawei equipment poses a significant security risk and have blocked the use of its equipment in its 5G network. These include the US, Australia, Japan and Vietnam. The UK is reconsidering its decision to allow Huawei to participate in its 5G network. All of this could be dismissed as paranoia in Western nations.

Their real intention might be to preserve, or at least deny China, leadership in next generation telecom technology. However, there is more to this than meets the eye.

Article 7 of China’s National Intelligence law states that “any organisation or citizen shall support, assist and cooperate with the state intelligence work in accordance with the law…

The 2014 Counter-Espionage law says that “when the state security organ investigates and understands the situation of espionage and collects relevant evidence, the relevant organisations and individuals shall provide it truthfully and may not refuse.”

China is an opaque totalitarian nation with no checks and balances and a captive press. The Chinese people cannot show dissent or criticise their government. If the Chinese government were to invoke the above-mentioned laws and force Huawei to install backdoors in its equipment to intercept data, it is highly unlikely that Huawei can refuse the obey the order.

It is true that other countries have indulged in similar malicious activities in the past, most notably the US. Crypto AG was a firm that sold equipment with weak encryption for decades to several countries including India. It was revealed only recently that Crypto AG was owned by the CIA and the West German intelligence organisation, BIND. However, there are at least some checks and balances in Western nations with a relatively free press and the right to dissent.

Also read: India Among Countries CIA Spied on For Decades Using Swiss Encryption Product, Say Reports

Should India follow the US and ban Huawei from its 5G network and go with another vendor such as Samsung or Nokia or Ericsson? There is no reason to believe that these vendors have not enabled backdoors in their equipment.

However, India does not have a tempestuous relationship with South Korea or Finland or Sweden. We don’t have border issues with any of them. None of them have killed Indian soldiers protecting the border. Until India can make its own 5G equipment, which seems unlikely in the near future, it would do well to reject Huawei on national security grounds.

There is deep anger within the Indian population against China and a decision such as this will ameliorate the anger.

The other area which India must examine carefully is in the mobile phone market. Chinese companies have more than two-thirds share of the market.

Also read: Amid Calls to Boycott Chinese goods, Oppo Cancels Live Online Phone Launch in India

With Sony exiting the Indian market, the only notable non-Chinese companies are Samsung and Apple. Just as with telecom equipment, it is possible to steal customer’s data from cell phones. Facebook does it (and has sold the personal data to other companies) and Google tracks users even when they surf in incognito mode.

The most recent entrant to this club of data stealers is Xiaomi, India’s largest cell phone provider. In an article published in April, Forbes quoted a security researcher who discovered that Xiaomi phones recorded sites that were visited, folders that were opened and phone settings. The data was shipped for storing in Alibaba cloud. Alibaba is also a Chinese company.

It is not a stretch to conclude that Xiaomi can copy any or all the data in a user’s phone and ship it to the cloud. Using the same Chinese laws mentioned above, the Chinese government can ask Alibaba to hand over the data stored in its cloud. If even some Indian government and security officials use Xiaomi phones (with Xiaomi having a 30% market share, this is highly likely) it is safe to say that what they do with their phones will be available to the Chinese government.

In conclusion, India does not have to do anything drastic to convey its point of view. India will be a major 5G market in the future and companies such as Samsung and Nokia will go out of their way to meet India’s requirements on security and price in the 5G market.

It should encourage other vendors such as Apple to manufacture more models and Sony to return to India. Finally, it should have a team of security researchers examine all Chinese high-tech equipment for security issues and publish them regularly for the common man to see and understand. Market forces and sentiment will then show the way forward.

Gopi Rajagopal in an IT architect specialising in the areas of disaster recovery and secure mobile applications.